Malaysian government used more than $12 billion in grants to repay 1MDB loans
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A total of RM39.74 billion (S$12.07 billion) in federal government grants were used to repay the 1MDB loans and related payments over a five-year period.
PHOTO: REUTERS
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KUALA LUMPUR - A total of RM39.74 billion (S$12.07 billion) in federal government grants were used to repay the 1Malaysia Development Bhd (1MDB) loans and related payments over a five-year period, according to the auditor-general’s latest report.
The grants were for principal repayment and other expenses, including bond interest and coupon payments.
Besides this, the federal government also had to set aside more money for the principal of Sukuk Islamic Medium Term Notes (IMTN), which matures on May 27, 2039, and RM4.46 billion for IMTN coupon payments from 2024 to 2039.
The report also noted that the federal government would have to repay RM5 billion in committed guarantee related to 1MDB after 11 years.
According to the report, the federal government repaid 1MDB loans amounting to RM13 billion in 2023, a 749.7 per cent increase compared to the RM1.53 billion repaid in 2022.
The auditor-general, among other things, recommended that the federal government recover assets related to 1MDB and SRC International Sdn Bhd from both domestic and foreign parties.
The recommendation included a proposal that the recovered assets be used to cover the debt repayment expenses of 1MDB and SRC companies as well as other debt expenses.
The report said this should be done as the assets recovery trust account would be closed by 2028 as stated under its trust directive.
The auditor-general’s report said the federal government’s debt was recorded at RM1.173 trillion in 2023, an increase of RM92.918 billion or 8.6 per cent, compared to RM1.080 trillion in 2022.
In the report released on Oct 14, the debt consists of domestic loans amounting to RM1.143 trillion or 97.5 per cent of the total federal debt, and foreign debt totalling RM29.851 billion or 2.5 per cent.
Domestic loans increased by RM92.580 billion or 8.8 per cent, while foreign debt rose by RM0.338 billion or 1.1 per cent, the report said.
“The federal liabilities position at the end of 2023 showed an increase, with the federal liabilities to gross domestic product (GDP) ratio at 81.8 per cent compared to 78 per cent in 2022,” the report added.
In addition, guarantee commitments also increased by RM3.288 billion or 1.5 per cent to RM227.404 billion compared to RM224.116 billion in 2022.
To improve federal debt management, the report said the Malaysian government implemented fiscal reforms on Oct 11, 2023.
The report also advised that serious attention be paid to new borrowings.
This step is aimed at focusing on financing loan repayments that will mature, as the federal government needs to allocate funds to repay maturing loans totalling RM773.750 billion over the next 10 years.
The targets are set for a deficit not exceeding 3 per cent of GDP, national debt not exceeding 60 per cent of GDP, and financial guarantees not exceeding 25 per cent of GDP, the report said. THE STAR/ASIA NEWS NETWORK
